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Apple Update: Should Avoid Supply Disruptions that Hit Intel

Intel (
INTC
) recently lowered its revenue outlook for Q4 2011 by $1 billion
from previously estimated $14.7 billion to $13.7 billion. The
company blamed this shortfall on the supply shortage of hard
disk drives resulting from floods in Thailand. This is an issue
that impacts all PC makers, and hence HP (
HPQ
), Dell (
DELL
) and Apple (
AAPL
) should also get affected. However, we believe that Apple has
proven in the past that it cant manage supply chain related issues
better than its rivals and so we don't expect much of an impact for
its Mac line.

In the past, Apple has overcome its supply related issues
which includes shortages of both labor and materials at
its plants in China and the Japanese earthquake leading to a
squeeze in raw material supply (see
Apple Eyes $430 as Component Prices Improve
). According to an in-depth report by Bloomberg BusinessWeek,
Apple will continue to enjoy operational efficiency through upfront
cash payments offered to its suppliers as "strategic weapons" to
secure a significant advantage over its rivals. By managing
the supply chain efficiently, the company is in a better position
to negotiate its terms with suppliers.

Apple should be able to maintain Mac sales
growth

The overall PC market growth is expected to be slow due to
slowing demand and supply chain related issues such as a shortage
of hard disk drives mentioned above. However, given the negotiating
power that Apple has over its suppliers, it should be able to
maintain its Mac sales growth resulting in market share gains. At
most, Apple might have to pay more to secure the supply of raw
material through its suppliers. This could have a slight effect on
the margins for its PC segment, but the market share gain should
offset that loss.

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